Our full year 2024 results: Building on our strong foundations

After spending well over 30 years at Smiths Group in a variety of roles, I was honoured to have been invited to be CEO by the Smiths Board in March 2024. Six months later, I am pleased to report a good performance at our first set of full year results since being appointed.

We delivered organic revenue growth of +5.4% and a +30bps increase in headline operating profit margin to 16.8%, both in line with guidance, and earnings per share growth of 8.3%. We also improved headline operating cash conversion to 97%. All good progress against our medium-term financial targets.

We also announced two highly attractive acquisitions to strengthen our Flex-Tek business for up to £110m¹, as we deployed capital in a strategic and disciplined way, whilst maintaining our balance sheet strength.

Effective execution of our strategy has enhanced our performance, but there is always more that we can do. Indeed, we see significant opportunities within all our businesses to deliver substantial additional value creation.

And, although our strategic priorities around growth, people and execution remain, there are some important changes:

We remain resolutely focused on delivering continued profitable organic growth, but we will work harder to drive our innovation agenda and the successful commercialisation of our new products. In addition, we will increase the importance of moving into new, higher-growth market segment adjacencies with targeted allocation of our R&D resources. Highly disciplined M&A offers additional opportunities to improve existing positions or enter adjacent market segments. This is demonstrated by the most recent acquisitions to the portfolio, and we now have a more active pipeline which will allow us to accelerate the pace of strategy execution with further focused acquisitions.

Our people are critical to our success – and in delivering value for our customers. Delivering on our growth and execution priorities requires the dedication and commitment of all our colleagues. And here again we want to accelerate: we are committed to doing more to inspire and empower you all. So you can expect to see talent attraction and leadership development initiatives permeate through the Group, benefiting our workforce and our growth.

Meanwhile, industry-leading safety will continue to be our highest priority, and we remain committed to maintaining our top quartile performance by elevating the focus on this even further.

The theme of acceleration is echoed in our execution agenda. We also announced a Group-wide Acceleration Plan to enhance profitability and productivity. Whilst we are growing and continue to make progress, I know there is more that we can do to accelerate this growth and make the most of future market opportunities.

We are also taking a more end-to-end approach to improve business level processes by implementing a global shared business services model which will provide improved cost-effective support to all businesses. In addition, the Smiths Excellence System – our system of Lean and continuous improvement – will now be driven at the grass roots level, rather than led ‘top-down’ from Group.

The outcome of this work will be a more focused future strategic direction for the company - an area that I have spent the last six months assessing thoroughly. From my long career at Smiths, I have a deep appreciation of our compelling attributes. Smiths has many strengths, and our businesses are well positioned for the future – we have leading positions in attractive markets, world-class engineering expertise, differentiated proprietary technology, strong brands and, most importantly, talented people united by a shared commitment to innovation and continuous improvement.

I’d like to thank all my colleagues across the company for your hard work, dedication and support, enabling us all to live our purpose of engineering a better world.

Thank you.

Roland Carter is CEO of Smiths Group plc.

¹ Combined purchase price of £95m, with an additional amount of up to £15m payable subject to the performance of one of the acquisitions over a three-year period.